Section 234 of the Companies Act, 2013
Section 234 of the Companies Act, 2013 deals with the provisions related to mergers and amalgamations between Indian companies and foreign companies.
📘 Section 234 – Merger or Amalgamation of Company with Foreign Company
✅ Key Provisions:
🔹 1. Cross-border Mergers Allowed
Indian companies can merge with foreign companies, and vice versa, under this section.
The foreign company must be incorporated in a jurisdiction notified by the Central Government.
🔹 2. Approval by Tribunal
The merger scheme must be approved by the National Company Law Tribunal (NCLT) under Sections 230 to 232.
🔹 3. Rules & Conditions
The Central Government, in consultation with the Reserve Bank of India (RBI), may frame rules regarding:
Valuation of shares,
Consideration (cash/securities),
Accounting standards,
Other procedural matters.
🔹 4. Consideration in Securities or Cash
In case of merger into an Indian company, the consideration can be in the form of:
Cash, or
Depository Receipts (DRs), or
Other securities as agreed and approved by RBI.
🌍 Foreign Jurisdictions Permitted:
As per the Companies (Compromises, Arrangements and Amalgamations) Rules, foreign companies must be incorporated in jurisdictions that meet FATF compliance standards and are notified by the Ministry of Corporate Affairs (MCA).
🧾 Example:
If an Indian IT company plans to merge with a US-based tech firm, they must:
Ensure the US is a notified jurisdiction,
Get approvals from NCLT and RBI,
Follow the rules laid down under Section 234 and the related Rules.
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